NO LIABILITY MINING CO.

Dominion, Volume 11, Issue 137, 27 February 1918, Page 10

NO LIABILITY MINING CO.

CLAIM FOR ALLOTMENT •MONEY,

Reserved judgment was .delivered by Mr. S. E. M'Carthy, S.M., in tho Magistrate's Court yesterday, in the case in which the Mammoth Molybdenite Mines, Ltd. (no liability), procoeded against F. J. Lysnar to recover the sum of £112 10s., being £62 10s. in respect of money alleged to bo payable as tho allotment on 500 shares in the company and £50 in respect of ft call of 2s. per share thereon. The company at the hearing abandoned the claim us- to the call. _ The company issued a prospectus which was brought to the. knowledge of the defendant. Tim defendant on December 22, 1016, applied for 500 shares in tho plaintiff company, and paid £50 on application. The shares were allotted on January 11, 1917, and some time thereafter registered in the plaintiff company's share register. Notice of allotment was sent tho defendant, and the notice claimed the allotment money. The contentions, on the part of the plaintiff were: (a) That the mutual rights and obligations of the parties were partly statutory and partly contractual; (b) that paragraph b of section 347 only absolves, defendant .in -Jr«>'peot of calls', arid,jwntributions in a ■winding up; (c)-that.:moneys- payablo ■on allotment arc not a call.

The contentions on behalf of the defendant were:: (a)' That the relations between -the parties were purely statutory, and in no sense contractual; (b) that defendant was, in the absence of a winding-up, only liable for calls, (c) that all moneys payable in respect of sharo capital after' the application money are calls; (d) that assuming contention (c) to'be correct, the prospectus was a misrepresentation; (e) that if allotment moneys were recoverable the statutory description of "no liability" was a misnomer.

Tlie Magistrate said that after a careful perusal of decided cases ho was driven to the conclusion that the relation, between shareholder and company was partly statutory and partly contractual. The Molybdenite Company mado provision for the admission of shareholders by contract—in fact, shareholders woro admitted only by contract. Defendant had kept the notice of allotment and the share ceriiiicate. and.it was too late to repudiate. Tho.contract between the parties chew a clear distinction between application, allotment, and call • moneys. The application , money was tendered when applying for shares. The allotment money was payable by the member after the shares had been allotted. A call, for'the purposes of the presentcase,'was part of the uncalled share capital made payable by the member pursuant to resolution of the directors. A call could not bo made until shares were allotted, for it was only on shareholders that calls could be made. It had been decided that a payment on allotment was not a call. Allotment money not being a call or contribution on a winding-up, the defendant was not, in respect of it, relieved from liability. The argument that if defendant was liablo for allotment money the statutory term "no liability" was illusory was capable of a simple answer. It was that intending . shareholders must.go to the statute to see what tho term meant.

Judgment was given for the plaintiff company for £62 10s. and costs totalling £6 13s. Gd,

.At the hearing Mr. D. M. Findlay appeared for the plaintiffs and Mr. T. Nqave for the defendant.